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BAD TO WORSE TO WORSER Market Pulse IN THE U.S.: First, the housing market slowed consumer spending down. Then, the wave of deleveraging spawned by mortgage derivatives froze up the credit markets and slowed business investment down. Then, a rise in the dollar and a slowing Europe and Asia slowed export demand down. Then, as layoffs began, people started spending less either because they weren’t getting a paycheck or because they began to fear for their jobs. Then, as the financial markets began to collapse, people spent less because of rapidly shrinking portfolios. The next shoe to drop on this centipede is a sharp cutback in spending by local and state governments. These governments are not only collecting a lot less revenue. They are having a devil of a time financing and refinancing their budget needs. Moreover, when they can get money, it’s very expensive. The worst part here is that our government doesn’t seem to know what to do. Despite dedicating hundreds of billions to stabilize the housing market, foreclosures continue apace. Despite the dangers of letting the U.S. auto industry go down the tubes, politics is trumping economics. By January, we are going to have a new president and what’s shaping up to be a stellar cabinet presiding over an absolute train wreck. IN THE REST OF THE WORLD Europe, Japan, and Russia along with half of Asia are in, or slipping into a recession. China is gearing up its “beggar thy neighbor” policies by increasing export subsidies on 3,700 products. Ugly is as ugly does. From this snapshot, it’s easy to see why the markets continue to circle round the drain. Still, me thinks a bottom doth be approaching. So do your homework and get ready to jump in. For those with cash (i.e., the people who followed the musing of this newsletter) and for those with at least some appetite for risk, the play is going to be to layer into the market, starting with small positions and building them. Stay tuned..
THE CHINA EFFECT Please see my latest You Tube report.
“Any trader or investor who ignores the power of macroeconomics over the world’s The Market Edge Market Summary from www.marketedge.com
©
2008
Peter Navarro CONTACT
INFORMATION DISCLAIMER: This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling, or holding of any financial instrument whatsoever. Trading and investing involves high levels of risk. The authors express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The authors may or may not have positions in the financial instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future performance. |
